As a semi-self employed individual (I do have my day job also), I am always looking for better investment and retirement options for the self-employed and small businesses. Solo 401k is one retirement saving options which gives you the flexibility to contribute both as an employee and as an employer. This guide does a complete analysis of the Vanguard Solo 401k or the solo 401k Vanguard plan for self-employed individuals.
Read “What is a Solo 401k Plan“
Read “Best solo 401k providers in 2023 for Self-Employed and Small Businesses“
Read “How to setup a solo 401k account“
Read “Solo 401k contribution limits“
Welcome to a comprehensive review of Vanguard Solo 401k, the retirement plan designed specifically for self-employed individuals and small businesses. In this in-depth analysis, we’ll explore the features, investment options, eligibility requirements, and more that make Vanguard Solo 401k a compelling choice for those seeking a robust retirement solution.
We’ll also delve into the benefits of Vanguard Solo Roth 401k, discuss rollovers, loans, and withdrawals, and provide insights on fees associated with the plan.
Additionally, we’ll compare Vanguard Solo 401k with other Solo 401k providers, enabling you to make an informed decision about your future financial well-being.
Table of Contents
Vanguard Solo 401k-Features
The table below gives a quick snapshot of the features of the Vanguard Solo 401k plan.
| Investment Options | Over 100 Vanguard Mutual Funds including the Vanguard’s low cost Admiral share class. |
| Eligibility | Freelancers or business owners, then with no employees (except the spouse who can be treated as an employee). |
| Roth Plan | Roth option is available in the Vanguard Solo 401k. |
| Rollover | Yes, most of your previous retirement plans can be rolled over or transferred to the Vanguard Solo 401k plan. |
| Loan option | Not available |
| Fees | There is zero fee to set up your solo 401k or individual 401k plan. However, a $20 annual fee is charged for each investment fund maintained with Vanguard. |
| How to make contributions | If you are the administrator of your Vanguard Solo 401k account, you can log in through the Vanguard Solo 401k or Individual 401k account and make the contribution. Log in here. If you are an employer looking to make a contribution, then log in here. |
| Withdrawals | No penalty-free withdrawals before age 59.5, disability, or death. |
Vanguard Solo 401k investment options
The Solo 401k plan Vanguard allows you to choose and invest from over 100 Vanguard Mutual Funds including the Vanguard’s low-cost Admiral share class.
The Vanguard Admiral Shares are mutual funds that offer lower expense ratios and lower investment minimums.
Check this for more details.
Vanguard Solo 401k-Eligibility
To be eligible to the Charles Schwab Solo 401k plan, you need to be self-employed or an owner only business (a business whose only employees are partners and their spouses).
So, you can open a Vanguard Solo 401k plan, if you are self-employed or running a small business in which the only employees are either your spouse or other partners and their spouses.
C corporations, S corporations, and limited liability companies (LLCs), with no common-law employees, can also participate.
Note: You as the business owner can contribute both as the employee and the employer.
Vanguard Solo Roth 401k/Vanguard Roth Solo 401k
Vanguard offers both Roth and Traditional options in its Individual 401k or Solo 401k account.
Vanguard Solo 401k-Rollover
You can rollover or transfer all your previous retirement plans like traditional IRA, SEP IRA, SIMPLE IRA, and i401k from other providers, to the Vanguard Solo 401k plan.
In order to complete the rollover, you need to follow the below steps.
Step 1: Gather your past information
The first thing you need to do is to gather all your past account details (from the company which held your retirement plan). You will need
a) the plan statement dated within the past 90 days
b) the plan number and the dollar amount currently invested in the plan
Step 2: Call Vanguard
You can call Vanguard at 855-567-0215. (check the updated number here).
A qualified representative will let you know which documents are required to complete the transfer and answer any questions you have.
Step 3: Track your rollover
Vanguard will initiate the transfer and send you an email that explains how you can track the status of your transfer online
Vanguard Solo 401k-Loan option
Vanguard does not allow you to take a loan against your Vanguard Solo or Individual 401k plan.
Vanguard Solo 401k-Withdrawals
No withdrawals are allowed until a specific event or until something of the following happens:
- You reach an age of 59.5 years or more
- You terminated your Vanguard Solo 401k plan
In case you withdraw your funds before the age of 59.5 years of age, then you are levied with a 10% penalty fee.
Vanguard Solo 401k-Fees
Pricing and Fees:
| Account set up fee | **Account Maintenance Fee | Minimum opening fee | ***Commission | Support and assistance (Brokerage commissions) | |
| Vanguard | Zero | $20 for each account held. | Zero | Zero | May incur some fee |
**Monthly or annual maintenance fee: Vanguard charges an annual fee of $20 per account. This annual fee is waived off when you (or at least one of the members in the plan) hold at least $50,000 in qualifying Vanguard assets.
So, in case you and your spouse maintain two mutual funds via the Vanguard Solo 401k, then the annual account maintenance fee would be ($20+$20=$40).
Check for qualifying Vanguard assets here.
***Trading fee: Zero trading fee for trading mutual funds, ETFs, and stocks on your Vanguard account.
A few Vanguard mutual funds do charge a trading commission ranging between 0.25% to 1% of the amount of the transaction.
Vanguard Solo 401k-How to make contributions
If you are the administrator of your Vanguard Solo 401k account, you can log in through the Vanguard Solo 401k or Individual 401k account and make the contribution.
Log in here.
If you are an employer looking to make a contribution, then log in here.
Vanguard Solo 401k plan comparison with other Solo 401k providers
| Best Solo 401k providers | Investment options available | Fees | Loan | Rollover | Roth option available (Yes/No) | Mobile application (Yes/No) |
| Vanguard | Hundreds of Vanguard mutual funds , mutual funds from other companies, ETFs, stocks, CDs and bonds. | $20 annually for each account held | No | Yes | Yes | Yes |
| Fidelity | A wide range of mutual funds, stocks, bonds, ETFs, and more. | Zero | No | Yes | No | Yes |
| Charles Schwab | Mutual funds (thousand of options), ETFs, stocks, bonds, and cash equivalent options like money market funds. | Zero | No | Yes | No | Yes |
| E*Trade | Over 4,400 mutual funds, options, futures, and fixed-income bonds and CDs. | Zero | Yes | Yes | Yes | Yes |
| TD Ameritrade | Stocks, options (if approved), mutual funds, exchange-traded funds (ETFs), bonds, and CDs | Zero | No | Yes | No | Yes |
Pros and Cons
Customer Support
Vanguard provides one-on-one personal advisory services.
Call at 833-987-1555 to speak with an investment professional or click the link below
Partner with an advisor
Vanguard also provides low-cost digital advisory services. Click on the link below.
Digital advisory services
Any technical support regarding the website, account setup, and accessing the account from a mobile device can be requested from here.
Conclusion
Vanguard is a behemoth in wealth and investment management operating for the past multiple decades. John C. Bogle founded it, and it has its headquarters in Malvern, Pennsylvania, in the United States. Vanguard is well known for its Exchange-traded funds (ETFs) and low-cost index mutual funds.
Vanguard has built a solid reputation in the financial sector, mostly as a result of its concentration on low-cost investment and client-centered strategy. The business is well known for its long-term investment strategy, dedication to investor education, and priority given to the needs of its clients. Vanguard is frequently lauded for its openness, simplicity, and commitment to giving its investors value.
While it does have an annual fee of $20 per fund maintained with Vanguard, it stands out for its comprehensive offering of both Roth and Traditional options. Additionally, the plan allows for a seamless rollover of existing retirement plans into the Vanguard Solo 401k through a straightforward process.
Furthermore, Vanguard provides the convenience of a mobile application for easy account management. Overall, the Vanguard Solo 401k combines competitive features, flexibility, and user-friendly technology, making it a compelling choice for individuals seeking a reliable retirement plan
